Record number give up U.S. citizenship, defy stereotype

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Inside the long-awaited package, six pages of government paperwork dryly affirmed Carol Tapanila's anxious request. But when Tapanila slipped the contents from the brown envelope, she saw there was something more.

“We the people....” declared the script inside her U.S. passport — now with four holes punched through it from cover to cover. Her departure from life as an American was stamped final on the same page: “Bearer Expatriated Self.”

Tapanila, a native of upstate New York who has lived in Canada since 1969, joined a largely overlooked surge of Americans rejecting what is, to millions, a highly sought prize: U.S. citizenship.

Last year, the government reported a record 2,999 people renounced citizenship or terminated permanent residency; most are widely assumed to be driven by a desire to avoid paying taxes on hidden wealth. The reality, though, is complicated.

The government's pursuit of tax evaders among Americans living abroad is indeed driving the jump in abandoned citizenship, experts say. But renouncers — whose ranks have swelled more than five-fold from a decade ago — often contradict the stereotype. Many are from very ordinary economic circumstances.

Protecting his wife

Peter Dunn, born in Chicago and raised in Alaska, moved to Canada to pursue a graduate degree in theology. He met his wife, Catherine, and they made Toronto home when her work as one of the owners of an aviation maintenance firm made her the breadwinner.

Dunn remained an American. But he was alarmed by a change in U.S. law requiring those with more than $2 million in assets to pay an exit tax if they gave up citizenship. He did not have $2 million. But his wife was doing well enough that he imagined one day they could get there. The idea of the U.S. government taxing his Canadian wife's money didn't seem right.

“When I learned about that, I decided that to protect my wife, I better expatriate,” he says.

Feeling like a stranger

Some of those surrendering citizenship say their reasons are as much about life as about taxes, particularly since the U.S. government does not tax Americans abroad on their first $96,600 in yearly income.

Norman Heinrichs-Gale's parents were missionaries from Washington state who raised him in Asia and the Middle East. In 1986, he traveled to Austria with his American wife, and they found work at a conference center in an alpine town of 6,000. The jobs were supposed to last a year. But the couple stayed, sending their children to local schools.

On yearly trips to the U.S. he felt increasingly like a stranger. “I never forget going into a grocery store and just being stunned by my choice of cereals,” Heinrichs-Gale says. “I was stunned by just the pace of life compared to what we have here, stunned by the extremes of wealth and poverty that I encountered.”

Finding opportunity

Sports played the central role in Quincy Davis III's decision. Davis, raised in Los Angeles and Mobile, Ala., played professional basketball in Europe after three years as Tulane University's leading scorer. By 2011, he was home studying to become a firefighter when he was offered a spot on a Taiwanese pro squad. He's since helped lead the Pure Youth Construction team to two championships.

When the team's owner suggested last year that he join Taiwan's national team, Davis says he found little motivation to keep his U.S. citizenship.

“When you think about who I am as a black guy in the U.S., I didn't have opportunities,” he says. “You get discriminated against over there in the South. Here everyone is so nice. They invite you into their homes, they're so hospitable. ... There's no crime, no guns. I can't help but love this place.”

Looking for work

Six years after Tapanila's husband lost his job at a Boeing factory in Washington state and they moved to Canada for work, the couple became citizens of their new country. She says U.S. consular officials told her that by swearing allegiance to Canada, she might have lost her U.S. citizenship.

After retiring from a job as an administrative assistant at an oil company in Calgary, Tapanila began putting $125 a month into a special savings account for her developmentally disabled son, now 40.

Tapanila, 70, says she did not know she was required to file U.S. income tax returns until 2007, when her daughter raised the subject. Her troubles were compounded by her decision to apply for a U.S. passport when a border officer told her that she should have one. She has since spent $42,000 on fees for lawyers and accountants and paid about $2,000 in U.S. taxes, including on funds in her son's disability savings account.

In 2012 she renounced her U.S. citizenship.

“You know, we are not rich people, and we are not tax evaders, and we are not traitors, and I'm more than tired of being labeled that way,” Tapanila says.

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